Saudi Arabia's Almarai Company, the Gulf's largest dairy company, and Hail Agricultural Development (Hadco) said on Saturday they had agreed on a share swap deal.

Hadco shareholders will receive one share in Almarai in exchange for five shares in Hadco, in addition to 50 cents for each Hadco share, a statement on the bourse website said.

Almarai is interested in Hadco because it has projects in animal feedstock and poultry and Almarai is interested in investing in the poultry business, Khalid Al-Nasser, Almarai investor relations manager, told Reuters.

Hadco, based in the Hail region in north Saudi Arabia, is the fourth largest poultry producer in the country.

The share swap decision will be finalized after the two companies hold general assemblies, said Al-Nasser.

Almarai has been diversifying its revenues through acquisitions and has earmarked SR6 billion ($1.6 billion) for investments to expand outside the Gulf Arab region.-Reuters